Corporate taxation and investment decisions of quoted non-financial firms in Nigeria
DOI:
https://doi.org/10.33003/fujafr-2026.v4i3.415.146-158Keywords:
capital expenditure, corporate taxation, investment decisions, lagged investment, leverageAbstract
Purpose: This study examines the impact of corporate taxation on the investment decisions of quoted non-financial firms in Nigeria.
Methodology: An ex-post facto research design was employed and secondary data were collected from audited financial statements of 51 purposively selected quoted firms on the Nigerian Exchange Group between 2013 and 2024. Capital expenditure served as a proxy for investment, while the effective tax rate represented corporate taxation, alongside firm-level control variables. Data were analysed using descriptive statistics, correlation analysis and inferential statistics. Panel regression with fixed effects was employed.
Results and Conclusion: The results show that effective tax rate exerts positive insignificant effect on investment decision of quoted non-financial firms in Nigeria. By contrast, leverage and lagged investment have positive significant effect, firm size exerts a significant negative effect while liquidity and market-to-book value have positive but insignificant effect on investment decision of quoted non-financial firms in Nigeria. The overall model is statistically significant and the explanatory variables of the study explained 49% variation in capital expenditures of quoted non-financial firms in Nigeria. The findings show that taxation is not a decisive factor in shaping firm-level investment in Nigeria’s non-financial sector. Instead, non-tax determinants such as leverage, reinvestment behavior, and firm size exert greater influence.
Implication of Findings: Policymakers need to strengthen the structural and financial environment to create favorable conditions for capital formation. At the corporate level, managers should adopt effective reinvestment strategies and efficient financing practices to enhance firms’ capacity to generate and sustain capital investment. Collectively, these measures can contribute to improved capital formation and support long-term economic growth.
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